Relationship between Relationship between advertising and firm value: advertising and firm value: Evidence from Jordan Evidence from Jordan

Abstract

The impact of advertising and sales promotion on firm value and sales performance

within the Jordanian manufacturing sector was examined, recognizing the significant

role of advertising in enhancing competitive market outcomes. The study aimed

to investigate the effect of advertising and sales promotion on firm value within the

manufacturing Jordanian firms that holds a benefit for deciphering several challenges

and opportunities that firms face within an emerging market context. Data from 64

Jordanian manufacturing firms listed on Amman Stock Exchange between 2014 and

2022 were analyzed. Regression analysis was applied across two models: one focused

on the relationship between advertising expenditures and firm value, while the other

assessed sales performance. Firm size and return on equity served as control variables

across both models.

The results revealed that advertising and sales promotion expenses had a significant

and positive effect on both firm value and sales performance. Specifically, advertising’s

impact on firm value was characterized by a coefficient of 0.107 and a t-value of 3.640,

while its effect on sales performance yielded a coefficient of 0.321 and a t-value of 9.372,

both with p-values of 0.00, highlighting a strong statistical significance. Additionally,

firm size demonstrated a robust positive effect on both outcomes, underscoring its role

as a critical control factor. Return on equity, however, did not yield a significant effect.

These findings underscore the importance of advertising as a driver of firm growth

and market position, particularly in larger firms. Investment in advertising appears to

foster sustainable value and performance enhancements, offering firms in competitive

sectors a strategic path for growth.

Keywords: M37, G32, L25 firm value, marketing expenditure, financial performance, corporate strategy, emerging markets, value creation, managerial decisions LLC "СPС "Business Perspectives" Hryhorii Skovoroda lane, 10, Sumy, 40022, Ukraine